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TMI Blog2009 (12) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... r. N.H. Seervai, senior Advocate with Mr. Firdosh Pooniwala i/by M/s. Little Co. , Mr.Shiraz Rustomji with Anil Agarwal , Mr.I.M. Chagla and Mr.D.H. Khambata, Senior Advocates with Mr.Simil Purohit i/by M/s.Kanga Co. , Mr.S.N. Fadia i/by Mr.Naresh Fadia , Mr.Venkatesh Dhond with Mr.Prashant Beri i/by M/s.Beri Co. for Applicants ORAL JUDGMENT (Per J.P. Devadhar, J.) 1. Basically two questions are raised in this petition. They are, firstly, whether the permissions granted by the Reserve Bank of India to the respondent Nos.12 to 14 foreign law firms to establish their place of business in India (liaison office) under Section 29 of the Foreign Exchange Regulation Act, 1973 are legal and valid ? Secondly, assuming such permissions are valid, whether these foreign law firms could carry on their liaison activities in India only on being enrolled as advocates under the Advocates Act, 1961 ? To be specific, the question is, whether practising in non litigious matters amounts to practising the profession of law under section 29 of the Advocates Act, 1961 ? 2. The Parliament has enacted the Advocates Act, 1961 ( 1961 Act for short) to regulate the persons practising th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U.S.A. and having branch offices in different parts of the world had applied to the RBI during the period 1993 to 1995 seeking permission to open their liaison offices in India. In the application filed by respondent No.12, it was stated that the activities to be carried on by the liaison offices were :- A. To act as a coordination and communications channel between the White Case head office and other White Case offices and its clients in and outside India; B. To coordinate and liaise with the various Government agencies and bodies, including Reserve Bank of India; C. To act as a coordination and communication channel between offices of While Case and Indian legal advisors assisting such offices or other clients; D. To collect information and data in respect of clients and prospective clients and furnish the same to the head office and other White Case offices; E. To establish business contacts and act as a listening post between the head office and the Indian entities; F. To explore and promote the possibility of foreign investments and technical and financial collaborations in India with clients and prospective clients; G. To provide information re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 to 14 is limited for the purpose of Section 29 of the Foreign Exchange Regulation Act, 1973 (`1973 Act for short) and that the said permission should not be construed in any way regularizing, condoning or in any manner validating any irregularities, contraventions or other lapses if any under the provisions of any other law for the time-being in force. 8. Mr.C.U. Singh, learned Senior Advocate appearing on behalf of the petitioner submitted that the permission granted by RBI to respondents No.12 to 14 under Section 29 of the 1973 Act is bad in law, because, firstly, nationals of foreign states intending to practice any profession in India can be granted permission under Section 30 and not under Section 29 of the 1973 Act. Secondly, to carry on the profession of law even in non-litigious matters, enrollment as advocates under the 1961 Act was mandatory. Since the foreign law firms were not enrolled as advocates under the 1961 Act, the RBI could not have granted permission to the respondents No.12 to 14 to open their liaison offices in India under Section 29 of the 1973 Act. 9. Mr.Singh further submitted that the 1961 Act is a complete code for regulating the practice of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights under foreign law as it is with respect to his rights under domestic law. The State need not have separate examinations for those who will specialize in real estate law, patent law, mining law, foreign law, or any other law. There are many branches of the law that a Bar examination does not reach, but the test is a general one which all qualified applicants are required to take. And so all are equally subject to the same character qualifications. Thus it is not unreasonable to require that a person desiring to engage in the practice of foreign law be admitted to the Bar here and be subject to the same rules as every other member of the Bar of this State. (emphasis supplied) 13. The Supreme Court of South Carolina in its opinion No.25757 reported in 2003 S.C. Lexis 293, inter alia held thus :- Based on the foregoing analysis, we hold that when nonlawyer title abstractors examine public records and then render an opinion as to the content of those records, they are engaged in the unauthorized practice of law. But if a licensed attorney reviews the title abstractor s report and vouches for its legal sufficiency by signing the report, title abstractors would not be engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court is not permitted. Conduct in court is a matter concerning the court and hence the Bar Council cannot claim that what should happen inside the court could also be regulated by them in exercise of their disciplinary powers. The right to practise, no doubt, is the genus of which the right to appear and conduct cases in the court may be a specie. But the right to appear and conduct cases in the court is a matter on which the court must and does have major supervisory and controlling power. Hence, courts cannot be and are not divested of control or supervision of conduct in court merely because it may involve the right of an advocate. ................................ (emphasis supplied) 16. In the case of Supreme Court Bar Association V/s. Union of India reported in (1998) 4 Supreme Court Cases 409, the Apex Court has held thus :- 58. After the coming into force of the Advocates Act, 1961, exclusive power for punishing an advocate for professional misconduct has been conferred on the State Bar Council concerned and the Bar Council of India. That act contains a detailed and complete mechanism for suspending or revoking the licence of an advocate for his professional mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that in view of the permission granted by RBI, the foreign law firms, namely respondents No.12 to 14 have an unfair advantage over the advocates practising the profession of law in India, because, Indian advocates practising in non litigious matters are subjected to the provisions of the 1961 Act and the rules framed by the Bar Council, whereas, the foreign law firms like respondents No.12 to 14 are neither subjected to the 1961 Act nor the rules framed by the Bar Council. Accordingly, Mr.Singh submitted that the permission granted by RBI being in gross violation of the provisions contained in the 1973 Act as well as the 1961 Act, the said permission must be declared to be illegal and contrary to law. 19. Counsel for the Bar Council of India and Bar Council of Maharashtra Goa have adopted the arguments advanced by the counsel for the petitioner. 20. Mr.Rajinder Singh, Senior Advocate appearing on behalf of the Union of India submitted that there is no proposal, as of now, to allow foreign lawyers to practice Indian law in Indian Courts. He submitted that the Government is still in the process of consulting all the stake holders and any decision on the issue will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior Advocate appearing on behalf of RBI submitted that the permission given by RBI to the respondents No.12 to 14 was within the scope and ambit of powers vested in RBI under the 1973 Act. He submitted that Section 29(1)(a) of the 1973 Act empowers RBI to grant permission to a resident outside India to establish a branch office or a place of business in India. He submitted that RBI is not concerned with the provisions contained in the 1961 Act and in any event, the permission granted by RBI is only to establish a liaison / representative office to act as a communication channel between the overseas principal and parties in India. 23. Counsel for RBI further submitted that the respondents No.12 to 14 had stated in their application that they wish to undertake liaison activities in India and further specifically stated that they will not appear in Indian Courts and shall not practice Indian law. Since the permission granted by RBI was limited to granting permissions to overseas entities for undertaking specific activities enumerated in the permission letter and the said permission was not to be construed in any way regularizing or validating any irregularities or lapses under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of O.N. Mohindroo V/s. Bar Council reported in AIR 1968 S.C. 888, (see page 893) wherein it is inter alia held thus :- 10. .................. Though the Act relates to the legal practitioners, in its pith and substance it is an enactment which concerns itself with the qualifications, enrolment, right to practise and discipline of the advocates. As provided by the Act once a person is enrolled by any one of the State Bar Councils, he becomes entitled to practise in all courts including the Supreme Court. As aforesaid, the Act creates one common Bar, all its members being of one class, namely, advocates. Since all those who have been enrolled have a right to practise in the Supreme Court and the High Courts, the Act is a piece of legislation which deals with persons entitled to practise before the Supreme Court and the High Courts. Therefore, the Act must be held to fall within entries 77 and 78 of List I. As the power of legislation relating to those entitled to practise in the Supreme Court and the High Courts is carved out from the general power to legislate in relation to legal and other professions in entry 26 of List III, it is an error to say, as the High Court d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely provides that from the appointed day there shall be only one class of persons entitled to practise the profession of law. Section 29 does not confer the right to practise the profession of law. It is Section 33 which provides that advocates enrolled under the 1961 Act alone are entitled to practise in any Court or before any authority. Moreover, Section 49(1)(ag) and Section 49(1)(ah) of the 1961 Act, empower the Bar Council of India to make rules relating to the class or category of persons entitled to be enrolled as advocates and the conditions subject to which an advocate shall have the right to practise. Therefore, the 1961 Act which applies to persons practising in litigious matters before the Supreme Court / High Courts / Tribunals cannot be applied to persons practising in non-litigious matters. 29. In support of the above contentions, Mr.Seervai placed reliance on various decisions and for the sake of convenience, relevant portions of the respective judgments are extracted herein below. In the case of Sushma Suri V/s. Govt. of National Capital Territory of Delhi Another reported in (1999) 1 Supreme Court Cases 330, the Apex Court inter alia held thus :- 6. If a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the class of persons contemplated by Section 29 by enlarging the said class of advocates entitled to practise as full-fledged advocates. Entitlement to practise the profession of Law necessarily means full-fledged entitlement to plead and argue cases of their clients before the courts of law. There cannot be any truncated right to practise the profession of Law which is sought to be culled out by Shri P.P. Rao, learned Senior Counsel for the Bar Council of India on a conjoint reading of Sections 29 and 49(1)(ag) of the Act. (emphasis supplied) 31. The Apex Court in the case of Indian Council of legal Aid and Advice V/s. Bar Council of India reported in (1995) 1 SCC 732, has inter alia held thus : 3. It will be seen from the above provisions that unless a person is enrolled as an advocate by a State Bar Council, he shall have no right to practise in a court of law or before any other Tribunal or authority. Once a person fulfils the requirements of Section 24 for enrolment, he becomes entitled to be enrolled as an advocate and on such enrolment he acquires a right to practise as stated above. Having thus acquired a right to practise he incurs certain obligations in regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al goal of administration of justice puts the lawyer appearing in the Court in a class by himself and to compare him with an ordinary agent may be to lose sight of the lawyer as engineer of the rule of law in society. (bracketed portion is supplied) 33. The Apex Court in the case of Ashwini Kumar V/s. Arabinda Bose reported in AIR 1952 S.C. 369, held thus :- 6. A brief historical survey of the functions, rights and duties of legal practitioners in this country may facilitate appreciation of the contentions of the parties. Before the Indian High Courts Act of 1861 (24 and 25 Vict. Ch. 104) was enacted, there were, in the territories subject to the British rule in India, Supreme Courts exercising jurisdiction mainly in the Presidency Towns, and Sudder Courts exercising jurisdiction over the mufassil. Though the Supreme Courts were given, by the Charter Acts and the Letters Patent establishing them, power to enroll Advocates who could be authorized by the rules to act as well as to plead in the Supreme Courts rules were made empowering Advocates only to appear and plead and not to act, while Attorneys were enrolled and authorised to act and not to plead. In the Sudder Courts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o do in the Supreme Court under the Rules of that Court. Such Rules are liable to be altered at any time in exercise of the rule-making power conferred by Art. 145 of the Constitution. (emphasis supplied) 34. This Court in the case of Mulchand Gulabchand V/s. Mukund S. Bhide reported in AIR 1952 Bom 296, has inter alia held thus :- Therefore, his right to practise is controlled by this important provision that any other law for the time being in force may restrict or take away his right. Therefore, if the Co-operative Societies Act were to provide that an advocate of the High Court of Bombay shall not practise before the arbitral tribunal set up under that Act, then the right of the advocate will be circumscribed by the provisions of that law. It should be remembered that it is not the fact that a man has passed a law examination or has acquired a law degree that entitles him to practise in Courts of law; his right to practise depends upon his being enrolled as an advocate and he is enrolled as an advocate on terms and conditions laid down in the Bar Councils Act. Therefore, as I said before, his very charter which entitles him to practise lays down conditions and limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liaison activities within the frame work of the terms and conditions imposed by the RBI. The report submitted by the Officers of RBI bear testimony to the claim of respondent No.12. He submitted that the argument that the respondent No.12 ought to have applied for permission under Section 30 of the 1973 Act is without any merit because that section requires foreign nationals to take prior permission before taking up employment etc. in India wherein the foreign exchange acquired would be required to be remitted outside India. In the present case, the foreign law firms were not taking up any employment in India and they were not seeking to carry on trade or business in India which involved forwarding remittances outside India. Therefore, the respondent No.12 could not have applied for permission under Section 30 of the 1973 Act. For all the aforesaid reasons, Mr.Seervai submitted that the permission granted by RBI to open liaison offices in India under Section 29 of the 1973 Act was valid and to such a case the 1961 Act would not be applicable. 38. Counsel for respondent No.13 and 14 while adopting the arguments advanced by Mr.Seervai, submitted that the respondent No.13 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btaining permission from R.B.I. under section 29 of the 1973 Act ? Section 29 of the 1973 Act provides that without the permission of RBI, no person resident outside India or a person who is not a citizen of India but is resident in India or a Company which is not incorporated in India shall establish in India a branch office or other place of business, for carrying any activity of a trading, commercial or industrial nature. Foreign law firms engaged in practising the profession of law in the foreign countries cannot be said to be engaged in industrial, commercial and trading activities. The liaison activities of respondent Nos. 12 to 14 in India being activities relating to the profession of law, no permission could be granted to the foreign law firms under section 29 of the 1973 Act. The Apex Court in the case of M.P. Electricity Board V/s. Shiv Narayan reported in (2005) 7 Supreme Court Cases 283 has held that there is a fundamental distinction between the professional activity and the activity of a commercial character. The Apex Court has further held that to compare the legal profession with that of trade and business would be totally incorrect. Therefore, in the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to practise the profession of law, namely, advocates. (not brought into force so far) 30. Right of advocates to practise. - Subject to provisions of this Act, every advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends, - (i) in all Courts including the Supreme Court; (ii) before any tribunal or person legally authorized to take evidence; (iii) before any other authority or person before whom such advocate by or under any law for the time being in force entitled to practise. 33. Advocates alone entitled to practise. - Except as otherwise provided in this Act or in any other law for the time being in force, no person shall, on or after the appointed day, be entitled to practise in any Court or before any authority or person unless he is enrolled as an advocate under this Act. 35. Punishment of advocates for misconduct (1) Where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or other misconduct, it shall refer the case for disposal to its disciplinary committee. (1-A) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to persons practising in non litigious matters. The question, therefore, to be considered is, whether the 1961 Act applies only to persons practising in litigious matters, that is, practising before Court and other authorities ? 48. In the statements of Objects Reasons for enacting the 1961 Act, it is stated that the main object of the Act is to establish All India Bar Council and a common roll of advocates and Advocate on the common roll having a right to practise in any part of the country and in any Court, including the Supreme Court. Thus, from the Statement of Objects and Reasons, it is seen that the 1961 Act is intended to apply to (one) persons practising the profession of law in any part of the country and (two) persons practising the profession of law in any Court including the Supreme Court. Thus, from the statement of objects and reasons it is evident that the 1961 Act is intended to apply not only to the persons practising before the Courts but it is also intended to apply to persons who are practising in non litigious matters outside the Court. 49. Apart from the above, Section 29 of the 1961 Act specifically provides is that from the appointed day, there shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act provides imprisonment for persons illegally practising in Courts and before other authorities, it cannot be said that the 1961 Act does not contain provisions to deal with the persons found guilty of misconduct while practising in non litigious matters. Once it is held that the persons entitled to practise the profession of law under the 1961 Act covers the persons practising the profession of law in litigious matters as well as non-litigious matters, then, the penal provisions contained in section 35 of the 1961 Act would apply not only to persons practising in litigious matter, but would also apply to persons practising the profession of law in non-litigious matters. The very object of the 1961 Act and the Rules framed by the Bar Council of India are to ensure that the persons practising the profession of law whether in litigious matters or in non litigious matters, maintain high standards in professional conduct and etiquette and, therefore, it cannot be said that the persons practising in non litigious matters are not governed by the 1961 Act. 52. Strong reliance was placed by the counsel for the respondent No.12 on the decision of the Apex Court in the case of O.N. Moh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents are distinguishable on facts. 54. It is not the case of the respondents that in India individuals / law firms / companies are practising the profession of law in non-litigious matters without being enrolled as advocates under the 1961 Act. It is not even the case of the respondents that in the countries in which their head office as well as their branch offices are situated, persons are allowed to practice the profession of law in non-litigious matters without being subjected to the control of any authority. In these circumstances, when the Parliament has enacted the 1961 Act to regulate the persons practising the profession of law, it would not be correct to hold that the 1961 Act is restricted to the persons practising in litigious matters and that the said Act does not apply to persons practising in non litigious matters. There is no reason to hold that in India the practise in non litigious matters is unregulated. 55. It was contended by the counsel for Union of India that if it is held that the 1961 Act applies to persons practising in non-litigious matters, then no bureaucrat would be able to draft or give any opinion in non-litigious matters without be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilty of misconduct in performing his duties while practising in non-litigious matters cannot be punished under the 1961 Act. Similarly, where an advocate who is debarred for professional misconduct can merrily carry on the practise in non-litigious matters on the ground that the 1961 Act is not applicable to the persons practising the profession of law in non litigious matters. Such an argument which defeats the object of the 1961 Act cannot be accepted. 58. It may be noted that Rule 6(1) in Chapter III Part VI of the Bar Council of India Rules framed under section 49(1) (ah) of the 1961 Act provides that an advocate whose name has been removed by an order of the Supreme Court or a High Court or the Bar Council as the case may be, shall not be entitled to practise the profession of law either before the Court and authorities mentioned under section 30 of the 1961 Act, or in chambers, or otherwise. The above rule clearly shows that the chamber practise, namely, practise in non litigious matters is also within the purview of the 1961 Act. 59. Counsel for the Union of India had argued that the Central Government is actively considering the issue relating to the foreign law firms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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